The Future of Capitalism? AU Grad Student Says Look at Honduras

By Gregg Sangillo|October 15, 2018

In the aftermath of a military coup in Honduras, Beth Geglia has examined radical economic plans for the Central American country.

Honduras is a relatively small country. Yet some powerful interests have converged there, making it a laboratory for transformative—but potentially destructive—policies. Economists marvel at rising behemoths like China, but there are lessons to be learned in Central America. Honduras could be a harbinger for the next phase of global capitalism.

When a military coup rocked Honduras in 2009, Beth Geglia was working for a human rights organization in neighboring Guatemala. In the violent post-coup aftermath, Geglia observed some US-based economists’ radical vision for Honduras, and she hoped to understand the larger implications for the world economy.

Geglia is now an anthropology PhD student at American University, and Honduras has become her research passion. “I wanted to get a better grasp of where capitalism is heading, and what’s at the forefront of globalization and privatization,” she says.

Charter Cities, Separate Laws

You may have heard about Special Economic Zones (SEZs), areas with unique regulatory regimes meant to spur economic growth. But what’s being proposed in Honduras is much more sweeping, Geglia argues. The Special Development and Employment Zones, or ZEDEs in Spanish, are akin to charter cities—heavily privatized, deregulated territories within the nation state. Geglia is focusing on a prospective ZEDE in the southern part of the country.

Like SEZs, this ZEDE would have weaker labor and environmental standards, and lower taxes, than the Honduran national government that surrounds it. But what really makes the ZEDE different, Geglia says, is an entirely separate judiciary.

“Basically, it provides investors, and the administrators they appoint, the ability to establish independent court systems. So, they’re really operating outside of the Honduran judicial system,” Geglia explains. “In a way, this is unprecedented in Central and Latin America. It is absolutely a way for investors to circumvent national laws.”

This could be a boon for multinational corporations, and Geglia says there’s potential interest from the electronics, tourism, and mining industries. So certain mineral-rich zones could be optimal for companies to mine and extract resources. Notably, with judicial independence from the country at large, the ZEDE would facilitate a favorable investment climate.

“There’s always a legal framework under which any economic activity can take place. So whether it’s mining, banking and finance, or something else, this could be applicable to almost any economic arrangement,” Geglia says.

The Startup Society Movement

The ZEDE is arguably a neocolonial endeavor, in another era ripe for a Graham Greene novel. It’s driven by a confluence of actors: Silicon Valley disruptors, former Reagan Administration political advisers, global investors, technocrats, and Honduran government officials. These groups are not a monolith, but Geglia saw commonalities under the umbrella of a Startup Society Movement.

“There’s an overarching project to create a competitive market of autonomous jurisdictions in the world. So, their idea being that the nation state has monopoly on sovereignty, and we need to break up that monopoly on sovereignty,” she says. “For them, the democratic process is not the way we create change. The reforms they want to see in governance is, of course, based on a privatize everything, free market model.”

Sovereignty and Citizenship

But where does that leave the Honduran population, many of whom survive on subsistence fishing and farming? Could this generate jobs? Geglia spent a year in the southern municipality of Amapala, gauging people’s feelings about the planned ZEDE. With limited information, they expressed some ambiguity about how the project will affect them.

“You bring it up with one person, and they might have a completely different idea of what it is than the next person,” she says. “And there is some anxiety about all of a sudden living under a different government or a different regime.”

However, in the Zacate Grande area of Amapala, some communities have organized in opposition to the ZEDE project, noting that it will likely increase land dispossession and threaten their access to the agricultural and coastal lands necessary for their subsistence economies.

Though she didn’t conduct public opinion polls, other surveys revealed conflicting feelings: One poll found about 80 percent supported the ZEDE, and another one showed about 80 percent opposed it.

The process itself has been shrouded in secrecy, beginning with the establishment of a 21-member Committee for the Adoption of Best Practices. Nine Americans initially served on the committee, including former Reagan officials—such as Mark Klugmann and Faith Ryan Whittlesey—who supported controversial US Cold War policies toward Central America in the 1980s. (US-backed Nicaraguan Contras were based in Honduras.)

Information about that committee has been scarce, Geglia says, and she’s been unable to even obtain an updated list of current members. That also raises questions about how much say Honduran citizens will have in their future, she notes.

“I’m interested in looking at issues of sovereignty and democracy and citizenship,” Geglia says. “So the big questions for me are, ‘What does sovereignty and what does citizenship mean in Honduras today? How do people grapple with this kind of a territorial model that’s being proposed?’”

Beyond Honduran Borders

Geglia grew up right here in the Tenleytown neighborhood of DC, and a volunteer summer program in the Dominican Republic solidified her focus on Latin America. She got her undergraduate degree in Latin American studies, sociology, and international political economy at University of Wisconsin-Madison. She earned a certificate from Duke University’s Center for Documentary Studies, and she’s hoping to incorporate her film-oral history work into her AU dissertation.

While earning her doctorate in anthropology, she’s striving to make her research publicly assessible. This work, she believes, has relevance beyond Honduran borders and into the United States.

“I want to see how logic of the completely privatized territory in Honduras relates to the logic of charter schools, gentrification, or business development projects,” she says. “How is this changing what citizenship means? How is it eroding democracy?”